In June, Barclays was fined £290m for its role in the Libor rate rigging scandal. Chairman Marcus Agius and chief executive Bob Diamond both resigned as a result.

In August, the Wheatley Review into Libor ruled out leaving Libor unchanged, given the weaknesses and loss of credibility the inter-bank lending rate has suffered.

The discussion paper calls for the rate to be “significantly strengthened” and for the governance of Libor to be made more robust and transparent.

It also calls for Libor alternatives to be considered, with the creation of benchmarks mooted.

However, the Treasury says any adoption of alternative benchmarks will require international coordination, given the global importance of Libor.

The FT says the Federal Reserve and US Treasury have argued it would be difficult to replace Libor with an alternative without disrupting financial markets because the Libor rate is included in existing contracts and loans.

A Treasury report published in August expressed concerns the FSA was two years behind US regulators in investigating Libor, which it said contributed to a perceived weakness of London’s regulatory system.

Following FCA chief Martin Wheatley’s concerns around contingent charging, Money Marketing examines who charges what for advice and explores how fee models are set to become a key regulatory battleground.